Photo: Daryl James
As if the waiting time for a bus didn’t make people anxious, the public transport authorities have been caught in the spotlight after an audit found a raft of problems with the running of private operators in their service.
In one of the most comprehensive studies into the procurement practices of the Victorian bus service, the state’s Auditor-General John Doyle has tabled a report titled Tendering of Metropolitan Bus Contracts.
The management of private operators a big and expensive service, budgeted annually at $1 billion to deliver services to 300 routes covering over 5,500 kilometres, and serviced by over 1,700 buses.
But this audit has put pressure on Public Transport Victoria (PTV) because it examines whether the state has effectively secured value for money from the new Melbourne Metropolitan Bus Franchise (MMBF) arrangements.
These arrangements were established in 2013 to deliver around 30 per cent of Melbourne’s bus services and were unique as a procurement practice because they contained strengthened incentives and penalties designed to drive improvements in bus services.
Of course, the outsourcing of public services is intended to save the government time and effort, but the Auditor-General’s report has found that this simply isn’t the case for PTV.
Mr Doyle said that he found that the state has not secured full value for money from the MMBF agreement despite achieving almost $33 million in cost savings in 2013-14.
He gave a short and pointed list as to why the PTV has failed to get any value for money from these contacts valued at $1 billion per year.
According to Mr Doyle, the PTV has failed to resolve longstanding data reliability issues impacting the operation of the performance regime by April 2015 when it was due to be fully implemented.
It has also failed to withhold payments for instances of non-performance to encourage timely corrective action.
And finally, it has failed reach a timely agreement with the operator on the standard for determining incentive payments for improvements in bus patronage.
Mr Doyle has also raised concern about the PTV’s slow progress in preparing to reform the remaining metropolitan bus contracts expiring in 2018.
According to Mr Doyle, this risks compromising the state’s immediate opportunity to leverage better value from these services.
Problems are usually followed by solutions, and the Auditor-General has a few up his sleeve in the form of 13 recommendations intended to remedy to problems with performance data and contract management.
These include separating the role of probity auditor and advisor on future procurements and ensuring that contract management processes are in place prior to commencement for any new service contracts.
The timing of the release of the report follows a difficult period for PTV in its upper management, as its chairman Ian Dobbs decided to step down from his position shortly after the election of the new Daniel Andrews government. A replacement has yet to be announced.
